49 U.S.C. § 22401 — Definitions

(1) Cost. (A) "Cost" means the government's estimated long-term cost of a direct loan or loan guarantee, or a change to one. It is calculated on a "net present value" basis — today's value of money paid or received in the future. It does not include the cost of running the program or side effects on other government money coming in or going out. (B) For a direct loan, the cost is the net present value, measured when the loan is paid out, of these expected cash flows: loan disbursements, repayments of the amount borrowed, and interest and other payments over the life of the loan. This is adjusted for expected defaults, early payoffs, fees, penalties, and money recovered later. If the borrower uses an option written into the loan contract that changes the loan's terms, that change is included in the cost calculation. (C) For a loan guarantee, the cost is the net present value, measured when the guaranteed loan is paid out, of: payments the government makes to cover defaults, missed payments, interest subsidies, or other costs; and payments made to the government, like fees, penalties, and recovered money. Changes from the lender's or borrower's use of a contract option are included too. (D) The cost of a "modification" — a change to an existing loan or guarantee — is the difference between the current estimated value of the remaining payments under the old terms and the current estimated value of the remaining payments under the new, modified terms. (E) To figure out net present value, the discount rate used is the average interest rate on U.S. Treasury securities with a similar maturity to the loan's cash flows. (F) When money is committed ("obligated") for a direct loan or loan guarantee, the estimated cost is based on current assumptions for the fiscal year the money is obligated, adjusted to match the loan contract's terms. (2) Current. "Current" has the same meaning it has in a specific federal budget law — section 250(c)(9) of the Balanced Budget and Emergency Deficit Control Act of 1985. (3) Direct loan. A "direct loan" is money the government pays out to a non-federal borrower, under a contract that requires the borrower to pay it back. This includes buying or sharing in a loan another lender made, and financing deals that put off payment more than 90 days, including selling a government asset on credit. It does not include the government taking over a federally guaranteed loan because of a default. (4) Direct loan obligation. This is a binding promise by the Secretary to make a direct loan once the borrower meets certain conditions. (5) Intermodal. "Intermodal" means anything connecting rail service to other kinds of transportation, including all the parts of facilities where that connection happens. (6) Investment-grade rating. This means a rating of BBB-minus, Baa3, bbb-minus, BBB(low), or higher, given by a rating agency. (7) Loan guarantee. A "loan guarantee" is any guarantee, insurance, or other promise to cover all or part of the principal or interest on a debt a non-federal borrower owes a non-federal lender. It does not include insuring deposits or accounts at financial institutions. (8) Loan guarantee commitment. This is a binding promise by the Secretary to make a loan guarantee once the borrower, lender, or another party meets certain conditions. (9) Master credit agreement. This is an agreement to make one or more direct loans or loan guarantees at future dates, for a group of related projects, on terms the Secretary accepts. (10) Modification. A "modification" is any government action that changes the estimated cost of an existing direct loan or loan guarantee from its current estimate. This includes selling loan assets — with or without the government keeping responsibility for losses — and buying back guaranteed loans. It also includes changes caused by new laws or by the Secretary using administrative discretion under existing law, such as changing how payments are collected. (11) Project obligation. This is a note, bond, debenture, or other debt a borrower issues to help finance a project — but it is not a direct loan or loan guarantee under this chapter. (12) Railroad. "Railroad" includes any railroad or railroad carrier as defined in section 20102, and any rail carrier as defined in section 24102. (13) Rating agency. This is a credit rating agency registered with the Securities and Exchange Commission as a "nationally recognized statistical rating organization," as defined in the Securities Exchange Act of 1934. (14) Secretary. "Secretary" means the Secretary of Transportation. (15) Substantial completion. This means either the project opening to passenger or freight traffic, or some other comparable event that the Secretary decides on and writes into the terms of the loan or guarantee.